various gas companies under which shares to the value of over £2,000,000 are held by employees.

Joint Stock Banks.

62. Several of the Joint Stock Banks have recently devoted considerable attention to attracting small savings and developing Savings Bank Departments, in some cases in conjunction with home safes. Both Mr. McKenna and Mr. Henry Bell in evidence before us attached importance to this development, but the movement is at present in a comparatively early stage, and in any case the business is so closely related to the general business of the Banks that separate statistics are not likely to be available.

Other Savings Agencies.

63. Of the other savings institutions by far the most notable is the Yorkshire Penny Bank. This Bank, which is now owned jointly by the large Joint Stock Banks, but continues to be run independently as a Savings Bank, has worked with great success in the Yorkshire area for many years. One of the most remarkable of its achievements has been the organisation of an effective system of School Savings Banks. Deposits at 30th June, 1927, amounted to £27,534,000, but have not much increased of recent years.

64. In Scotland, as already mentioned, there are a number of Savings Banks which are similar in origin to Trustee Banks but continue to operate independently under an Act of 1819. The most important of these are Airdrie, Greenock and Dumfries. Airdrie, with deposits of £3,403,181, though it carries on an ordinary savings bank business and has a Penny Bank attached to it, in some respects resembles more closely a Special Investment Department of a Trustee Bank. It pays a higher rate of interest on sums left through the whole year than on sums deposited or withdrawn during the year (the rates being 33 per cent. and 3 per cent. respectively), and it also pays a higher rate (4 per cent.) on amounts deposited before 15th August, 1923. Greenock divides its deposits (amounting in all to £1,581,676) into current and deposit accounts, paying on the former 4 per cent. on accounts less than £100 and 3 per cent. on larger accounts and on the latter 3 per cent. Dumfries, with deposits of £681,370, limits single deposits to £10, deposits in any one year to £50 and total deposits to £500, and pays 41 per cent.

65. Reference should be made also to the Co-operative Societies which receive a certain amount of money by way of savings deposits and a much larger amount of small savings as shares. In Lancashire small savings are also largely invested in local industrial undertakings at short notice, and in many towns in the North of England and Scotland in small Municipal Mort

gages. Moreover, in addition to all these generally recognised methods of saving, there are of course numerous church, school and other thrift clubs, penny banks and other similar agencies.

Conclusion.

66. We consider in Part II of our report whether there is a sufficient case for the addition of Municipal Savings Banks to the agencies already existing for the encouragement of thrift, but this brief brief review of the position shows at any rate that a large number of agencies are at work all over the country, and that they have accumulated a great volume of small savings. We may add, however, that, while Savings Bank records give some information as to the distribution of depositors among different classes of the population, little information seems to be available as to the distribution of the total deposits among different classes, and in relation to the income and total capital resources of depositors. This question, though obviously difficult to elucidate, might well repay investigation.

Part II.-CRITICAL.

67. The historical summary in Part I of this Report shows that the establishment of Municipal Savings Banks might be authorised either by a general enabling Act or by private Acts. We think that, if the establishment of such banks could be recommended at all, the former course would be clearly preferable. A general Act would provide an opportunity of reviewing the whole position, of laying down general principles and establishing the several Banks as members of one system, but this would be impossible if powers were to be granted to a number of local authorities under private Acts. The Treasury and the Chief Registrar of Friendly Societies attached importance to the point that such banks (if allowed) should only be allowed under general law and not by Private Bill, and we entirely share this view. With this introductory observation, we proceed to review the evidence we have received as to the advantages claimed for Municipal Savings Banks and the disadvantages which they may be thought to involve.

SECTION 1.

ADVANTAGES OF MUNICIPAL SAVINGS BANKS.

68. Those who advocate the general establishment of Municipal Savings Banks urge that they would :

(a) greatly increase thrift.

(b) assist municipal finance, and

(c) encourage the purchase by the citizens of their own. houses.

(a) The incentive to thrift.

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69. The main argument submitted to us in favour of the general establishment of Municipal Savings Banks was that they would increase thrift. It was claimed that they would obtain a very considerable amount of new savings which would not, and indeed could not, be obtained by any other means. Mr. Ogden Whiteley considered that a good deal of new thrift would be encouraged by facilities of this kind." Sir William Hart thought that a Municipal Bank "would appeal to a sentiment that was not reached by any of the existing organisations." The opinion was expressed that the Birmingham Bank had obtained a large amount of savings that had simply been hoarded and which the possessors were not willing to entrust to any other agencies. It was suggested that Municipal Savings Banks would possess a number of special advantages as thrift agencies. They would obtain very great prestige and publicity by virtue of the fact that they were municipal institutions, and as such could command the services of an enthusiastic propaganda which

would not be given to any private concern even of a semi-public nature or in ordinary times to a national agency. They would appeal to the natural desire that local money should be available for expenditure on local purposes. By reason of the fact that banking would be their sole business they would be at a great advantage over the Post Office, the 'main business of which lay elsewhere. A subsidiary advantage would be that they could obtain at the same time economy and additional publicity by collecting rates and other municipal accounts.

70. Other witnesses, however, expressed the view that most of the money obtained by Municipal Banks would merely be diverted from existing institutions, that the proportion of new money would be comparatively small and that a considerable part even of that could be obtained by an extension of the activities of existing institutions. Sir Felix Schuster "hardly thought that individual thrift would be encouraged as existing opportunities were abundant." The Trustee Savings Banks Association considered that the Trustee Banks were doing much of the work that Municipal Savings Banks, if established, would be called upon to perform, and stated that the Banks were ready and competent to undertake such extension of their operations as the Government might sanction. The National Association of Building Societies submitted that the facilities for saving were ample, and that there was no community now needing the Municipal Bank for the exercise of thrift.

71. Having regard to the conflict of evidence and to the importance of the issue we have endeavoured to form an independent opinion upon the value of Municipal Savings Banks as an incentive to thrift by examining firstly the extent of the operations of the existing Savings institutions and secondly in some detail the effect upon those institutions of the Birmingham Municipal Bank. With the latter object in view a memorandum has been prepared under our direction (see Appendix 2).

The results obtained by existing agencies.

72. The review of existing agencies in Part I of our Report and the statistics of savings contained in Appendix 5 suggest prima facie that the ground is already well covered, and that it would be better to improve the existing agencies than to add others to them. Facilities are given for the deposit of small savings by most post offices, and by a large number of Trustee Savings Banks and many other agencies. In every town and village savings certificates may be purchased. The employees of Railway and other Companies and of many other large employers are provided with special opportunities for saving in connection with their work, while their wives and children may obtain home safes. There are great numbers of penny banks operating through the schools, and many mutual clubs and associations. The majority of these agencies offer complete

security and facilities for the easy and quick withdrawal of money, and many of them make active efforts to bring home to the man in the street the advantages of thrift and the opportunities for it.

73. At the same time there is undoubtedly a widespread feeling that a great proportion of the population are far less thrifty than they should be, less thrifty too than their fathers and the people of other countries. We think that this impression is often greatly exaggerated, but we agree that it cannot be assumed without question that all is as it should be, or that the great total of small savings is a conclusive indication of the sufficiently wide diffusion of thrift. In the first place it is to be observed that the increase in the funds of savings institutions has not in all cases kept pace with the rise in prices. Secondly, the great bulk of the deposits in any Savings Bank is held by a small proportion of the depositors. Thirdly, a considerable (and in some cases an increasing) proportion of the so-called small savings comes from the investing classes rather than from those for whose needs savings bank and thrift facilities are primarily intended. In particular, as mentioned in paragraph 56 of this report, it is probable that a considerable proportion of savings certificates is held by persons, or the children of persons, whose aggregate resources would hardly be described small savings.

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74. It must indeed, we think, be admitted that though the savings certificate is an admirable expedient for the encouragement of long term thrift, there must always be a great volume of small savings which it will not attract. where municipal authorities have been persuaded, whether on At the same time general grounds or by means of the arrangement under which they may borrow half the proceeds of sales of savings certificates, to take an active interest in encouraging the sale of certificates, an effective appeal appears to have been made to the sentiment of local pride which would be the strength of a Municipal Bank. Statistics were submitted to us which illustrated the help derived from vigorous Municipal co-operation. A special local appeal at Ipswich in 1925 increased sales by over 15 per cent., and continued local propaganda at Swindon (which is not a several years about 15 per cent. above the average for the whole a wealthy town) kept sales for country. We have not, however, examined how far these cases are representative of the country as a whole.

75. The Colwyn Committee on Taxation and the National Debt in reviewing working class savings were unable to reach any definite conclusion, but their discussion of the subject (paragraph 57) suggests that the volume of such savings was much the same as before the war. On the whole this accords with our own investigations, and we conclude that, while there is considerable scope for the further encouragement of thrift,